By Jillian Derby

Wage increases are moderating, health-insurance costs are accelerating, and Massachusetts employers plan to spend 2025 strengthening workforce stability and optimizing compensation.

Those are the conclusions of the 2024 Associated Industries of Massachusetts HR Practices survey, which gathers data on employment practices from more than 200 Massachusetts employers. The survey, released today, paints a vivid picture of the ways in which companies are responding to the developing economy around them.

“Employers are preparing for technological advancements, navigating remote and hybrid work models, addressing new compensation legislation, and prioritizing employee experience and well-being,” said Kyle Pardo, Executive Vice President of AIM HR Solutions, the human-resources service division of AIM.

“Compensation will continue to be a central focus for HR in 2025 as economic, social, and competitive pressures drive changes in employee expectations and workplace standards. These pressures coupled with the requirement for Massachusetts employers with 25 or more employees to start including pay ranges in their job postings in late 2025 will ensure that compensation remains top-of-mind for HR professionals throughout the year,” Pardo said.

The survey finds that AIM-member companies plan salary increases of 3.6 percent for 2025, consistent with national projections of 3.6 percent from Mercer and 3.8 percent from WorldatWork. The AIM number is down from 3.7 percent in 2024 and 4.2 percent during the height of the worker shortage in 2023.

Meanwhile, the cost of providing health insurance to employees continues to rise.

AIM members saw health-plan premiums rise by an average of 7.7 percent in 2024 versus 6.3 percent in 2023. Ninety-nine percent of survey respondents offer health insurance to their employees. The Center for Health Information and Analysis reported in a 2023 survey that 98.3% of Massachusetts residents reported having insurance while U.S. Census data shows that 92% of Americans have health insurance.

The most telling long-term conclusion of the HR Practices survey is a significant shift in priorities among CEOs and human-resources professionals during the five-year, post-COVID period.

At the height of the pandemic in 2021, the five priorities identified most often by companies were safety, compliance, recruitment/retention of workers, cost management and compensation. By 2024, the order of those priorities had shifted to compensation, recruitment/retention of workers, compliance, safety and morale/engagement.

Safety unquestionably remains a concern for employers, but it is no longer the overriding issue it was during the COVID crisis. Compensation, meanwhile, is now front-of-mind as companies prepare to comply with the new Frances Perkins Workplace Equity Law governing wage equity and transparency.

But that’s just the beginning:

• After three years on the list, diversity programs are no longer identified as one of the top five priorities.
• Sixty-one percent (61%) of respondents allow employees to work a hybrid remote work schedule. Twenty-one percent (21%) allow three days in the office with two days remote. Five percent (5%) of employers require four days in the office.
• Fifty-four percent of employers offer behavioral-health and mental-health resources compared to 22% in 2022.
• Forty-six percent of employers have noticed an increase in requests for intermittent use of Paid Family and Medical Leave, leading to staffing challenges and internal administration challenges.
• Fifteen percent of survey respondents report relaxing educational requirements and implementing skills-based hiring to expand their talent pool. Governor Maura Healey issued an executive order last year committing the commonwealth to skills-based hiring.

“These are complex issues but the professionals at AIM HR Solutions have seen it all before and look forward to helping AIM members understand and comply with new laws and regulations in 2025,” Pardo said.